Declining pig prices prompt China to cull one million sows.
China, the world's largest consumer and producer of pork, is currently facing a challenging situation in its pork market. The price of Chinese pigs has fallen almost 20% compared to last year, reaching a new annual low on August 10, at 13.77 yuan/kg (1.64 euros/kg).
Pork accounts for more than 60% of China's total meat consumption and a high share in the consumer price index for food. This significant drop in price has been affecting consumer purchasing power, leading to a decrease in pork consumption.
In an effort to combat the low pork prices, the Ministry of Agriculture and Rural Affairs of China has announced a reduction in the sow population. The organization is urging large breeders to reduce their sow population by about 2% and a total of 1 million animals. This reduction in sow population was announced at a meeting of the official Chinese Livestock Association.
The sow population is 3.7% above the normal level, indicating a significant increase in slaughtering in the second half of the year. Further measures such as controlling slaughter weight are planned to adjust supply to demand and mitigate the price drop.
Analysts expect price fluctuations and pressure to continue until September and October. The weak demand for pork in China is due to a summer slump, making it off-season for pork. Several meetings have been held recently to control production.
The current situation is causing hardship for Chinese farmers, who are struggling with falling pork prices. The sales profits of listed pork companies have fallen by double-digit percentages. Pork producers are currently experiencing declining profits due to falling prices.
As of the end of June, China had 424 million pigs, including 40.43 million sows. The pig market is currently stuck in a summer slump, with the hope that the measures taken will help stabilize the market in the coming months.
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